Economists Consider Inflation Progress While Trump Critiques Current Administration

In a recent address, President Trump highlighted the state of the economy, taking a moment to emphasize strides made in reducing inflation after a spike during the prior administration that complicated the U.S. recovery after the pandemic.

His statement was clear: “While the Biden administration and its allies in Congress delivered the worst inflation in our nation’s history, my administration brought core inflation down to its lowest level in more than five years in 12 months and to negative core inflation in the final three months of 2025,” he said, referencing a figure of 1.7%.

This statistic reflects a straightforward calculation. By the close of last year, the annualized three-month consumer price index (CPI) excluding food and energy was 1.7%, the lowest since early 2021. Interestingly, that timing marked the shift from Trump’s first term to Biden’s. A year prior, when Biden’s administration was wrapping up, the rate sat at 3.1%.

Considering the average quarterly inflation rate, it stands at 2.2%. This is an improvement from an expected 3.4% by the end of 2024. It’s clear that inflation saw a significant drop during Trump’s second term.

Contradictions in Economic Predictions

This progress is particularly remarkable against the backdrop of critics who warned that Trump’s economic strategies would only exacerbate inflation. They expected tariffs to drive up consumer prices and believed his immigration policies would kickstart a wage-price spiral, leading to increased costs. Some also pointed fingers at Trump’s tax cuts as potential inflation catalysts.

Despite the pushback from critics, many remain unwavering in their opposition to Trump’s economic tactics, building their arguments on shaky counterfactuals. They suggest that without tariffs, deportations, and tax cuts, inflation might have been even lower. However, such claims are difficult to substantiate and often not grounded in factual evidence.

One eccentric assertion by anti-tariff advocates is the belief that “excessive inflation” arises from core products rather than services, which they argue would be influenced by tariffs. Yet, data shows that the government-tracked index—covering commodities excluding food and energy—only rose by 1.1% year-over-year through January. Over a three-month span, the annualized increase was a mere 0.4%, remaining below the historical average of roughly 2% since the start of the century.

As for the year-on-year core CPI growth in January, it hit 2.5%. This indicates that CPI typically surpasses the Personal Consumption Expenditure Price Index, which the Federal Reserve targets. It seems they might have approached their objectives—or at least come quite close.

Underlying Inflation Appears Stabilized

Concerns about inflation variance have been raised by inflation hawks. Calculations from Bank of America reveal that, in December 2025, a significant portion of core PCEs and services displayed inflation rates exceeding 2%, a notable increase from previous years.

Nevertheless, the median CPI offers a more reassuring outlook, clocking in at an annual rate of 2.35% in January. This figure falls below averages from the previous decade and even earlier periods, suggesting that foundational inflation remains moderate.

The trimmed average CPI, as assessed by the Cleveland Fed, supports this narrative, registering an annual rate of 2.34% in January, lower than averages from prior years, particularly excluding the inflation spike of the Biden era.

Investigating the January CPI Report reveals that about 23% of CPI items (excluding broader categories) witnessed price declines in 2025. Without services included, that percentage increased to 25.2%, indicating that a quarter of essential goods saw a year-on-year price drop.

On top of this, the real average weekly wage—which considers inflation adjustments and labor demand—rose 1.9% through January. This marks the highest wage growth since March 2021 and significantly outpaces the averages recorded over the last decade and beyond.

It seems we might just be in a notable economic period.